Asian and European stock markets mostly lower overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Risk aversion is back in the marketplace early this week, amid geopolitical matters that continue to simmer.
China over the weekend filed a complaint with the World Trade Organization against the U.S. and its tariffs imposed on China. This move appears to ratchet up the trade war between the world’s two largest economies. The Chinese yuan dropped to an 11-year low against the U.S. dollar overnight, at near 7.2 to the dollar. The weaker yuan makes Chinese goods less expensive in U.S. dollar terms.
Civil unrest continues high in Hong Kong after another weekend of protesting. Reports said Hong Kong authorities are now considering declaring a state of emergency.
The British pound fell to a 34-year low against the greenback today amid turmoil in the U.K. over the British exit from the European Union (Brexit). The U.K. is presently set to leave the EU in October. New Prime Minister Boris Johnson is battling with his own party on the matter, as Johnson wants out of the EU in October, with no more extensions to negotiate a “soft” Brexit.
Meantime, Australia’s central bank held its interest rates steady today at its regular monetary policy meeting, but said future interest rate cuts could occur.
The key “outside markets” today see Nymex crude oil prices down and trading around $54.25 a barrel. The U.S. dollar index is solidly higher and hit a 27-month high overnight.
U.S. economic data due for release Tuesday includes the U.S. manufacturing purchasing managers’ index (PMI), the ISM manufacturing report on business, the IDB/TIPP economic optimism index, the global manufacturing PMI, and construction spending.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls have the slight overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,927.00 and then at last week’s high of 2,947.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,889.50 and then at 2,876.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,709.50 and then at 7,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,599.75 and then at 7,550.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 166 4/32 and then at the contract high of 166 25/32. Buy stops likely reside just above those levels. Shorter-term support lies at the 165 even and then at the overnight low of 164 17/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
December U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at last week’s low of 131.13.0 and then at 131.08.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 132.02.5 and then at the contract high of 132.09.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The December U.S. dollar index is higher and hit a 27-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight contract high of 98.900 and then at 99.250. Shorter-term support is seen at the overnight low of 98.630 and then at 98.290. Wyckoff’s Intra Day Market Rating: 8.0
NYMEX CRUDE OIL
October Nymex crude oil prices are lower in early U.S. trading. Bears have the slight overall near-term technical advantage amid a seven-week-old price downtrend in place on the daily bar chart. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $55.00 and then at the overnight high of $55.24. Look for sell stops just below technical support at $53.50 and then at $52.96. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were mostly weaker in overnight trading. Corn was steady to 1 cent down, soybeans down around 1 to 2 cents and wheat steady to off 2 cents. There is a lack of fresh bullish fundamental inputs for the grain markets at present, with underlying bearish elements continuing to pressure prices. China over the weekend filed a complaint with the World Trade Organization against the U.S. and its tariffs imposed on China. This move appears to ratchet up the trade war between the world’s two largest economies. With the US corn and soybean harvest approaching rapidly, weather in the Midwest continues to be non-threatening. Still, a warmer autumn is needed to help the corn and soybean crops fully mature. The big speculative “fund” traders continue to hold net short positions in the grain futures. And the US dollar index has just surged to a 27-month high this week, which is making US grains more expensive on the world markets. Bullish grain traders are hoping that all the bearish fundamental news has been factored into prices at present, and that the seasonal “harvest lows” are in place or close at hand.